United Airlines shares plummet due to fourth quarter profit outlook and Israel-Hamas war


Summary: Shares of United Airlines dropped over 7% after the company provided a negative forecast for fourth-quarter profit, mainly due to rising fuel prices. The longer suspension of flights to Israel amid the Israel-Hamas war could also impact the company’s revenue. Despite beating expectations for the third quarter, United’s projected earnings of $1.50 to $1.80 per share for the fourth quarter fell short of analysts’ forecast of $2.09 per share. The outlook for the airline’s profit is dependent on whether flights to Tel Aviv resume next month or remain suspended until year-end.

Shares of United Airlines tumbled more than 7% on Wednesday morning after the carrier provided a disappointing outlook for its fourth-quarter profit. The decline in shares not only affected United Airlines but also impacted the rest of the industry. The gloomy outlook is mainly attributed to the rising prices of jet fuel, which are expected to reduce the company’s profit. Additionally, the ongoing Israel-Hamas war has further dampened the airline’s revenue forecast. United had been flying to Tel Aviv from three major cities in the US, more than what Delta Air Lines or American Airlines were offering. However, all three airlines suspended their service shortly after the Hamas attack on Israel in early October.
Despite beating expectations for the third quarter with a profit of $1.14 billion, United Airlines failed to reassure investors with its fourth-quarter forecast. The company projected earnings of $1.50 to $1.80 per share, significantly below the estimated $2.09 per share predicted by analysts. The profitability of the airline for the remainder of the year depends on whether flights to Tel Aviv will resume next month or continue to be suspended until the end of the year. Cowen analyst Helane Becker expressed a grim outlook for United’s fourth-quarter performance, referring to the forecast as ‘bleak’ and worse than their own estimates.
United Airlines’ suspension of service to Tel Aviv is a major factor affecting the company’s revenue forecast. The duration of the Israel-Hamas war is uncertain, and the longer the suspension lasts, the more disappointing the revenue outcome will be for United Airlines. The company is anticipating no service to Tel Aviv until at least the end of the year, assuming that the conflict will continue for an extended period. The impact on revenue is particularly significant because United had more service to Israel than its competitors, flying to Tel Aviv from San Francisco, Washington, and Newark, New Jersey.

Tags: United Airlines, shares, profit outlook, fuel prices, Israel-Hamas war, flights, Tel Aviv, revenue forecast